Lightspeed Commerce’s shares have fallen 29% from their peak in the last weeks due to severe selling pressure.

Spruce Point’s short-sellers have targeted the company. Share prices have been affected by broader weakness of high-multiple-growth stocks due to higher rates on the 10-year Treasury Note.

The perfect storm of negative events has caused the once hot Canadian ecommerce market to quickly reverse.

Given the recent negativity and wild card risk associated with a short seller targeting the firm’s stock, I don’t want to attempt timing a bottom in LSPD stock. As such I’m bearish about the name. TipRanks shows Lightspeed stock chart.

LSPD Stock and Blow-off Top

LSPD stock still rose 156.7% despite this huge drop. It is back at the level it was in mid-to-early August 2021. The sell-off was painful, but it is still very minor when you look at the chart for the previous year.

It is difficult to predict how much of the gains from the previous year the stock might surrender. Investors want to grab profits from some of the fastest growing stocks, in order to avoid the possibility that the yield on the 10-year notes will increase significantly, possibly to as high as 2-3%.

This scenario could be devastating for early-stage growth companies such as Lightspeed.

Lightspeed has a lot going for it in the basics. Spruce Point still has its doubts.

Lightspeed’s management has since come to Lightspeed’s aid, but the investors aren’t convinced.

There are reasons to be concerned

There are many possible outcomes that could be disastrous right now. Spruce Point claims are not yet confirmed.

Shopify, an e-commerce startup from Canada, managed to withstand a brief attack by Andrew Left’s Citron Resources several years ago. Shareholders who remained loyal to the stock have seen incredible returns.

Spruce Point may be dismissed if they are able to ignore the fact that short-selling firms have a tendency to pursue Canadian companies. It’s possible that Spruce point is correct to be worried about Lightspeed accounting practices. There’s no way to know how many more negative consequences LSPD stock could face.

Lightspeed stock remains expensive at more than 56 times its sales. This makes it one of the most susceptible to this tech-focused sell-off in the wider market.

The back-and-forth between Spruce point and Lightspeed’s management is expected to continue for the moment.

Wall Street Take

TipRanks analyst consensus rate LSPD stock as a Moderate buy. The 13 analysts’ ratings include 10 Buy recommendations and two Hold recommendations. There is also one Sell recommendation.

The average Lightspeed price target is C$152.70. The price target for analysts varies from C$110 to C$195.00 per shares.

Disclosure: Joey Frenette does not own any shares in the companies mentioned at time of publication.

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